STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, made as of September 25, 1996 (this
"AGREEMENT"), by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, having an address at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("RS"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, having an
address at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("DS"), ▇▇▇▇▇
▇▇▇▇▇▇▇, having an address at c/o F. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("HB") (RS, DS and HB are collectively referred to
herein as "Seller"), PRIVITIZATION PLUS, INC., a Maryland corporation having
an address at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("ACQUIRED
CORPORATION"), and FAMILY GOLF CENTERS, INC., a Delaware corporation having an
address at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
("PURCHASER").
W I T N E S S E T H :
WHEREAS, Seller is the owner of all of the outstanding shares of capital
stock
of Acquired Corporation (the "STOCK"); and
WHEREAS, Seller wants to sell to Purchaser, and Purchaser wants to
purchase from Seller, the Stock on the terms, and subject to the conditions,
set forth herein.
NOW, THEREFORE, in consideration of TEN ($10.00) DOLLARS, the terms
and conditions set forth herein, and other good and valuable consideration,
the mutual receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree to the foregoing and as follows:
Agreement to Sell and Purchase. Seller shall sell, assign, transfer,
and convey to Purchaser at the Closing all of the outstanding shares of
capital stock of Acquired Corporation. Seller shall deliver at the Closing
certificates representing such shares duly
endorsed in blank or accompanied by stock powers duly endorsed in blank, in
each case in proper form for transfer, and with all stock transfer and any
other required documentary stamps affixed thereto.
1. Consideration; Repayment of Indebtedness.
1.1 Consideration. In consideration for the Stock, at the
Closing Purchaser shall deliver:
1.1.1 to RS, $305,009.40 and 00/100 Dollars ($305,009.40) by
bank or certified check or wire transfer;
1.1.2 to DS, $157,392.20 and 00/100 Dollars ($157,392.20) by
bank or certified check or wire transfer;
1.1.3 to HB, $607,598.40 and 00/100 Dollars ($607,598.40) by
bank or certified check or wire transfer; and
1.1.4 to Continental Stock Transfer and Trust Company (the
"ESCROW AGENT"), One Hundred Thousand and 00/100 ($100,000.00) (the "ESCROW
FUND"), to be held pursuant to that certain Escrow Agreement being entered
into among Seller, Purchaser and the Escrow Agent simultaneously herewith (the
"ESCROW AGREEMENT").
1.2 Repayment of Indebtedness to Seller. On the Closing Date,
immediately after the Closing, Purchaser shall pay to each of the individuals
set forth on Schedule 2.2 attached hereto the amounts set forth on such
Schedule by bank or certified check or wire transfer in full satisfaction of
those certain notes (the "Notes"), made by Acquired Corporation in favor of
such individuals, respectively, in the original principal amounts set forth on
Schedule 2.2 attached hereto.
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1.3 Direct Payment. Seller hereby authorizes Purchaser to pay the
amounts required by Section 2.1 and 2.2 hereof to their attorneys, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ & Case, L.L.C. by wire transfer.
2. Apportionments.
2.1 The parties hereto agree that the Closing hereunder shall
be deemed to be effective as of August 1, 1996 (the "Effective Date"). Seller
shall be entitled to a distribution from Acquired Corporation immediately
prior to the Closing in an amount equal to all cash on hand. Seller shall be
responsible for payment of all liabilities prior to the date hereof ("Retained
Liabilities").
2.2 To the extent that any of the prorations made upon the
Closing Date pursuant to this Article are based upon estimates of payments to
be made and/or expenses to be incurred by Purchaser subsequent to the date
hereof, or either party discovers any errors in or omissions in respect of the
Adjustment, Seller and Purchaser agree to adjust such prorations promptly upon
receipt by Seller or Purchaser, as the case may be, of such payments or of
bills or other documentation setting forth the actual amount of such expenses.
2.3 It is hereby acknowledged that the parties hereto
anticipate that the Lease (as defined in Section 5.6 hereof) will be
renegotiated and that the rent will be reduced from the current rent for a
period of time. The Purchaser hereby agrees that any such rent reduction
attributable to the period prior to the date hereof shall be paid to the
Seller, in the same proportion as the cash consideration was divided among
each Seller in Section 2.1 hereof, as and when such rent reduction is realized
by the Acquired Corporation.
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2.4 Seller and Purchaser shall maintain and make available to
each other any books or records necessary for the adjustment of any item
pursuant to this Article. The provisions of this Article 3 shall survive the
Closing.
3. The Closing. The closing of the transaction provided for in this
Agreement (the "CLOSING") shall take place simultaneously with the execution
and delivery of this Agreement (the actual date of the Closing being referred
to herein as the "CLOSING DATE"), at the offices of Squadron, Ellenoff,
Plesent & ▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at
such other place as may be mutually agreed to by Seller and Purchaser.
4. Representations and Warranties of Seller.
Each Seller hereby jointly and severally represents and warrants
to Purchaser as of the date hereof as follows:
4.1 Organization and Qualification. Acquired Corporation does
not own any interest in any corporation or other enterprise. Acquired
Corporation is a corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation, with all
requisite power and authority, and all necessary consents, authorizations,
approvals, orders, licenses, certificates, and permits of and from, and
declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and tribunals, to own, lease, license,
and use its properties and assets and to carry on the business in which it is
now engaged. Acquired Corporation is duly qualified to transact the business
in which it is engaged and is in good standing as a foreign corporation in
every jurisdiction in which its ownership, leasing, licensing, or use of
property or assets or the conduct of its business makes such qualification
necessary.
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4.2 Capitalization. The authorized capital stock of Acquired
Corporation consists only of 100,000 shares of common stock, $1.00 par value
per share, of which 10,000 shares are outstanding. Each of such outstanding
shares of Acquired Corporation is validly authorized, validly issued, fully
paid and nonassessable, has not been issued and is not owned or held in
violation of any preemptive right of stockholders, and is owned of record and
beneficially by each party comprising Seller in accordance with the following
table:
Name of Seller Number of Shares
-------------- ----------------
RS 4,000
DS 2,000
HB 4,000
free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements except for the provisions of the Stock
Redemption Agreement dated as of March 15, 1992, which provisions are
terminated by the Seller upon the execution and delivery of this Agreement),
and voting trusts. There is no commitment, plan, or arrangement to issue, and
no outstanding option, warrant, or other right calling for the issuance of,
any share of capital stock of Acquired Corporation or any security or other
instrument convertible into, exercisable for, or exchangeable for capital
stock of Acquired Corporation. There is outstanding no security or other
instrument convertible into or exchangeable for capital stock of Acquired
Corporation. Except for the repayment of the Notes as required by Section 2.2
hereof or as otherwise provided in this Agreement, all indebtedness of
Acquired Corporation to Seller shall be deemed satisfied in connection with
the Closing. RS and DS are the only officers and directors of Acquired
Corporation,
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and each of them hereby resign as officers and directors of Acquired
Corporation.
4.3 Financial Condition. Acquired Corporation has delivered to
the Purchaser true and correct copies of the following, initialled by the
chief executive officer of Acquired Corporation: (a) an audited balance sheet
and profit and loss statement of Acquired Corporation as of December 31, 1995
(the "BALANCE SHEET"); and (b) an audited profit and loss statement for
January 1 through June 30, 1996 (the "PROFIT AND LOSS STATEMENT"). Within ten
(10) days of the date hereof, the Acquired Corporation shall deliver to
Purchaser an unaudited profit and loss statement for the period beginning
January 1, 1996 through the day prior to the date hereof. The above-referenced
balance sheets presents fairly the financial condition, assets, liabilities,
and stockholders' equity of Acquired Corporation as of its date and each of
the above profit and loss statements presents fairly the results of operations
of Acquired Corporation for the period indicated and presents fairly the
information purported to be shown therein. The financial statements referred
to in this Section 5.3 have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved and are in accordance with the books and records of Acquired
Corporation. Since December 31, 1995 (the "CLOSING BALANCE SHEET DATE"):
4.3.1 There has at no time been a material adverse change in
the financial condition, results of operations, business,
properties, assets or liabilities of Acquired Corporation.
4.3.2 Acquired Corporation has not authorized, declared, paid,
or effected any dividend or liquidating or other distribution in
respect of its capital stock or any direct or indirect redemption,
purchase, or other acquisition of any
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stock of Acquired Corporation.
4.3.3 The operations and business of Acquired Corporation have
been conducted in all respects only in the ordinary course.
4.3.4 Acquired Corporation has not suffered an extraordinary
loss (whether or not covered by insurance) or waived any right of
substantial value.
4.3.5 Acquired Corporation has not paid or incurred any tax,
other liability, or expense resulting from the preparation of, or
the transactions contemplated by, this Agreement, it being
understood that Seller shall have paid or will pay all such taxes
(including stock transfer taxes resulting from this Agreement or the
transactions contemplated hereby), liabilities, and expenses.
4.4 Tax and Other Liabilities. Acquired Corporation has no liability
of any nature, accrued or contingent, including without limitation liabilities
for federal, state, local, or foreign taxes and penalties, interest, and
additions to tax ("TAXES") and liabilities to customers or suppliers, other
than the following:
4.4.1 Liabilities for which full provision has been made on the
Balance Sheet and the notes thereto referred to in Section 5.3; and
4.4.2 Other liabilities arising since December 31, 1995 and
prior to the Closing in the ordinary course of business which are
not inconsistent with the representations and warranties of any
Seller or any other provision of this Agreement and which are
reflected on the balance sheets and/or profit and loss statements
delivered pursuant to Section 5.3 hereof.
Without limiting the generality of the foregoing, the amounts set up as
provisions for Taxes on the Balance Sheet are sufficient for all accrued and
unpaid Taxes of Acquired
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Corporation, whether or not due and payable and whether or not disputed, under
tax laws, as in effect on the Closing Balance Sheet Date or now in effect, for
the period ended on such date and for all fiscal periods prior thereto. The
execution, delivery, and performance of this Agreement by Acquired Corporation
will not cause any Taxes to be payable (other than by Seller) or cause any
lien, charge, or encumbrance to secure any Taxes to be created either
immediately or upon the nonpayment of any Tax (other than on the properties or
assets of Seller). Acquired Corporation has filed all federal, state, local,
and foreign tax returns required to be filed by it; has delivered to the
Purchaser a true and correct copy of each such return which was filed since
its incorporation, initialled by the chief executive officer of Acquired
Corporation; has paid all Taxes, assessments, and other governmental charges
payable or remittable by it or levied upon it or its properties, assets,
income, or franchises which are due and payable; and has delivered to the
Purchaser a true and correct copy, so initialled, of any report as to
adjustments received by it from any taxing authority since its incorporation
and a statement, so initialled, as to any litigation, governmental or other
proceeding (formal or informal), or investigation pending, threatened, or in
prospect with respect to any such report or the subject matter of such report.
Acquired Corporation has validly elected and at all times validly maintained
its status as a Subchapter S corporation in accordance with all applicable
laws and regulations.
4.5 Litigation and Claims. Except as set forth on Schedule 5.5
attached hereto, there is no litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or investigation pending, or to the
best knowledge of Seller threatened or in prospect (or any basis therefor
known to Acquired Corporation or any Seller), with respect
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to Acquired Corporation, any Seller, or any of its or his respective
businesses, properties, or assets. Acquired Corporation is not affected by any
present or threatened strike or other labor disturbance nor to the knowledge
of any Seller is any union attempting to represent any employee of Acquired
Corporation as collective bargaining agent. Acquired Corporation is not in
violation of, or in default with respect to, any law, rule, regulation, order,
judgment, or decree; nor is Acquired Corporation or any Seller required to
take any action in order to avoid such violation or default.
4.6 The Lease. Attached hereto as EXHIBIT A is a true and correct
copy of the Sublease Agreement for Friendship Park, dated January 1, 1993 (the
"Lease"), between ▇▇▇▇ Arundel County, Maryland ("LANDLORD") and Acquired
Corporation. The Lease is in full force and effect, has not been modified or
amended in any way and neither Landlord nor Acquired Corporation is in
default, or sent or received any notice of default, in respect of the Lease.
No event has occurred or circumstance exists which, with the giving of notice
or the passage of time, or both, would constitute a default under the Lease.
Neither Acquired Corporation nor Landlord has exercised any right or option,
or stated its intent, to terminate or cancel the Lease; provided, however,
that it is understood and agreed that Acquired Corporation is in the process
of attempting to negotiate a substitute Lease which would be by and between
the Acquired Corporation and the State of Maryland. Acquired Corporation has
not assigned, mortgaged, pledged, transferred or conveyed the Lease or any
interest therein, or granted any right or option with respect thereto, to any
party other than Purchaser.
4.7 Properties. Acquired Corporation does not have any interest in
any real property other than under the Lease. Except as set forth on
Schedule 5.7 attached
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hereto, Acquired Corporation has good title to all other properties and assets
used in its business or owned by it, free and clear of all liens, mortgages,
security interests, pledges, charges, and encumbrances.
4.7.1 All accounts and notes receivable reflected on the
Closing Balance Sheet, or arising since the Closing Balance Sheet
Date, have been collected, or are and will be good and collectible,
in each case at the aggregate recorded amounts thereof without right
of recourse, defense, deduction, return of goods, counterclaim,
offset, or set off on the part of the obligor.
4.7.2 All inventory is merchantable and fit for the particular
purposes for which it is intended.
4.7.3 Attached as EXHIBIT B is a true and complete list of all
properties and assets owned by Acquired Corporation or leased or
licensed by Acquired Corporation from or to a third party, including
with respect to such properties and assets owned by Acquired
Corporation a statement of cost, book value and (except for land)
reserve for depreciation of each item for tax purposes, and net book
value of each item for financial reporting purposes, and, with
respect to such properties and assets leased or licensed by Acquired
Corporation, a description of such lease or license. All such
properties and assets (including Intangibles) owned by Acquired
Corporation are reflected on the Closing Balance Sheet (except for
acquisitions subsequent to the Closing Balance Sheet Date and prior
to the Closing which are noted in Exhibit B). All real and other
tangible properties and assets owned, leased, or licensed by
Acquired Corporation are in good and usable condition (reasonable
wear and
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tear which is not such as to affect adversely the operation of the
business of Acquired Corporation excepted).
4.7.4 No real property owned, leased, or licensed by Acquired
Corporation lies in an area which is, or to the knowledge of
Acquired Corporation or any Seller will be, subject to zoning, use,
or building code restrictions which would prohibit, and no state of
facts relating to the actions or inaction of another person or
entity or his or its ownership, leasing, licensing, or use of any
real or personal property exists or to the best knowledge of Seller
will exist which would prevent, the continued effective ownership,
leasing, licensing, or use of such real property in the business in
which Acquired Corporation is now engaged.
4.7.5 The real and other properties and assets (including
Intangibles) owned by Acquired Corporation or leased or licensed by
Acquired Corporation from a third party constitute all such
properties and assets which are necessary to the business of
Acquired Corporation as presently conducted.
4.8 Corporate Instruments. Acquired Corporation has furnished to
the Purchaser (a) the articles of incorporation (or other charter document)
and by laws of Acquired Corporation and all amendments thereto, as presently
in effect, certified by the Secretary of the corporation. The stock ledgers
and stock transfer books and the minute book records of Acquired Corporation
relating to all issuances and transfers of stock by Acquired Corporation and
all proceedings of the stockholders and the Board of Directors and committees
thereof of Acquired Corporation since its incorporation made available to the
Purchaser's counsel are the original stock ledgers and stock transfer books
and minute book records of Acquired Corporation or exact copies thereof.
Acquired Corporation is not
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in violation or breach of, or in default with respect to, any term of its
articles of incorporation (or other charter document) or by laws. RS, DS and
HB are the sole stockholders, officers and directors of Acquired Corporation.
Acquired Corporation is not a member of a customer or user organization or of
a trade association.
4.9 Employees. Acquired Corporation does not have or contribute to
any pension, profit-sharing, option, other incentive plan, or any other type
of Employee Benefit Plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), or have any
obligation to or customary arrangement with employees for bonuses, incentive
compensation, vacations, severance pay, insurance, or other benefits. Acquired
Corporation does not have any obligation to provide post-retirement medical
benefits or life insurance coverage to any present or former employees.
Acquired Corporation neither currently contributes to or since September 16,
1980 has effectuated either a complete or partial withdrawal from any
multiemployer Pension Plan within the meaning of Section 3(37) of ERISA. There
are no union or employment contracts or agreements (written or oral) involving
employees of Acquired Corporation.
4.10 Patents, Trademarks, Et Cetera. Acquired Corporation does not
own or have pending, or is licensed under, any patent, patent application,
trademark, trademark application, trade name, service ▇▇▇▇, copyright,
franchise, or other intangible property or asset (all of the foregoing being
herein called "INTANGIBLES"). Acquired Corporation has not infringed, is
infringing, or has received notice of infringement with asserted Intangibles
of others.
4.11 Authority to Sell. Acquired Corporation and Seller have all
requisite power and authority to execute, deliver, and perform this Agreement.
All necessary
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corporate proceedings of Acquired Corporation have been duly taken to
authorize the execution, delivery, and performance of this Agreement by
Acquired Corporation. This Agreement has been duly authorized, executed, and
delivered by Acquired Corporation, has been duly executed and delivered by
Seller, constitutes the legal, valid, and binding obligation of Acquired
Corporation and Seller, and is enforceable as to them in accordance with its
terms except to the extent that such enforceability (a) may be limited by
bankruptcy, insolvency, or other similar laws relating to creditors' right
generally, and (b) is subject to general principles of equity. No consent,
authorization, approval, order, license, certificate, or permit of or from, or
declaration or filing with, any federal, state, local, or other governmental
authority or any court or other tribunal is required by Acquired Corporation
or any Seller for the execution, delivery, or performance of this Agreement by
Acquired Corporation or any Seller. No consent of any party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to which
Acquired Corporation or any Seller is a party, or to which it or he or any of
its or his respective businesses, properties, or assets are subject, is
required for the execution, delivery, or performance of this Agreement; and
the execution, delivery, and performance of this Agreement will not violate,
result in a breach of, conflict with, or (with or without the giving of notice
or the passage of time or both) entitle any party to terminate or call a
default under, entitle any party to rights and privileges that such party was
not receiving or entitled to receive immediately before this Agreement was
executed under, or create any obligation on the part of Acquired Corporation
that it was not paying or obligated to pay immediately before this Agreement
was executed under, any term of any such contract, agreement, instrument,
lease, license, arrangement, or understanding, or violate or result in a
breach of any term of the certificate
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of incorporation (or other charter document) or by-laws of Acquired
Corporation or violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on Acquired Corporation or any
Seller or to which it or he or any of its or his respective businesses,
properties, or assets are subject. Upon the Closing, Purchaser will have good
title to all the capital stock of Acquired Corporation, free and clear of all
liens, security interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts.
4.12 Exemption from Registration. The offer, sale, and delivery of
the Stock as contemplated by this Agreement constitute exempted transactions
under the Securities Act of 1933 (as amended, the "SECURITIES ACT"), and
registration of such shares under the Securities Act is not required in
connection with any such offer, sale, or delivery of such shares.
4.13 Contracts. Except for the Lease and the matters set forth on
Schedule 5.13, Acquired Corporation is not a party to any leases, contracts,
orders or agreements (written or otherwise).
4.14 Condition of the Improvements. There are no material structural
or mechanical defects in the improvements located on the land covered by the
Lease, and there are no leaks in any roof on any such improvement.
4.15 Environmental Matters.
As used in this Agreement "HAZARDOUS MATERIAL" shall mean:
(i) any "hazardous substance" as now defined pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. ss. 9601(33); (ii) any "pollutant or contaminant"
as defined in 42
14
U.S.C. ss. 9601(33); (iii) any material now defined as "hazardous
waste" pursuant to 40 C.F.R. Part 261; (iv) any petroleum, including
crude oil and any fraction thereof; (v) natural or synthetic gas
usable for fuel; (vi) any "hazardous chemical" as defined pursuant to
29 C.F.R. Part 1910; (vii) any asbestos, asbestos containing material,
polychlorinated biphenyl ("PCB"), or isomer of dioxin, or any material
or thing containing or composed of such substance or substances; and
(viii) any other pollutant, contaminant, chemical, or industrial or
hazardous, toxic or dangerous waste, substance or material, defined or
regulated as such in (or for purposes of any Environmental Law (as
hereinafter defined) and any other toxic, reactive or flammable
chemicals.
4.15.2 To the best knowledge of Seller, there is no Hazardous
Material at, under or on the premises covered by the Lease (the
"PREMISES") and there is no ambient air, surface water, groundwater or
land contamination within, under, originating from or relating to the
Premises. Acquired Corporation has not, and has not caused to be,
manufactured, processed, distributed, used, treated, stored, disposed
of, transported or handled any Hazardous Material at, on or under the
Premises in violation of Environmental Law.
4.15.3 Acquired Corporation has no obligation or liability
imposed or based upon any provision under any foreign, federal, state
or local law, rule, or regulation or common law, or under any code,
order, decree, judgment or injunction applicable to Acquired
Corporation or the Premises or any notice, or request for information
issued, promulgated, approved or entered thereunder, or under the
common law, or any tort, nuisance or absolute liability theory,
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relating to public health or safety, worker health or safety, or
pollution, damage to or protection to the environment, including
without limitation, laws relating to emissions, discharges, releases
or threatened releases of Hazardous Material into the environment
(including without limitation, ambient air, surface water,
groundwater, land surface or subsurface), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
generation, disposal, transport or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances
or wastes (hereinafter collectively referred to as "ENVIRONMENTAL
LAWS").
4.15.4 Acquired Corporation has not been subject to any civil,
criminal or administrative action, suit, claim, hearing, notice of
violation, investigation, inquiry or proceeding for failure to comply
with, or received notice of any violation or potential liability under
the Environmental Laws in respect of the Premises.
4.15.5 The Premises are not (a) listed or to the best
knowledge of Seller proposed for listing on the National Priority List
or (b) listed on the Comprehensive Environmental Response, Compensation,
Liability Information System List ("CERCLIS") promulgated pursuant to
CERCLA, 42 U.S.C. ss. 9601(9), or any comparable list maintained by any
foreign, state or local government authority.
4.15.6 To the best knowledge of Seller, there are no
underground storage tanks at the Premises.
4.16 Tax Proceedings. There are no proceedings pending regarding the
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reduction of real estate taxes or assessments in respect of the Premises.
4.17 Utilities. All water, storm and sanitary sewer, gas,
electricity, telephone and other utilities adequately service the Premises,
enter the Premises through lands as to which valid public or private easements
exist that will inure to the benefit of Purchaser and the Premises are
furnished by facilities of public utilities and the cost of installation of
such utilities has been fully paid.
4.18 Access. To the best of Seller's knowledge, there are no
federal, state, county, municipal or other governmental plans to change the
highway or road system in the vicinity of the Premises which could materially
restrict or change access from any such highway or road to the Premises or any
pending or threatened condemnation or eminent domain proceedings relating to
or affecting the Premises. Purchaser has been provided with a true and
accurate survey of the Premises.
4.19 Insurance. Seller has delivered to Purchaser or its counsel
true and correct copies of all insurance policies carried by Seller or
Acquired Corporation for the benefit of Acquired Corporation or relating to
the Premises. All such policies have been fully paid for and are and have at
all times since their commencement date been in full force and effect. Seller
or Acquired Corporation have at all times since the formation of Acquired
Corporation maintained such policies or substantially similar policies in
effect. All requirements or recommendations by any insurer or by any board of
fire underwriters or similar body in respect of the Premises have been
satisfied.
4.20 Work at the Premises. No services, material or work have been
supplied to the Premises for which payment has not been made in full.
4.21 Full Disclosure. To the best knowledge of Seller, none of the
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information supplied by Seller herein or in the exhibits hereto contains any
untrue statement of a material fact or omits to state a material fact required
to be stated herein or necessary in order to make the statements herein, in
light of the circumstances under which they are made, not misleading.
5. Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to Seller as of the date hereof and as of the Closing
Date as follows:
5.1 Organization; Power and Authority. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite power and authority to carry on its
business as it is now being conducted, to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
5.2 Due Authorization and Execution; Effect of Agreement. The
execution, delivery and performance by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated hereby have been
duly authorized by all necessary corporate action required to be taken on the
part of Purchaser. This Agreement has been duly and validly executed and
delivered by Purchaser and constitutes the valid and binding obligation of
Purchaser, enforceable in accordance with its terms, except to the extent that
such enforceability (a) may be limited by bankruptcy, insolvency, or other
similar laws relating to creditors' rights generally, and (b) is subject to
general principles of equity. The execution, delivery and performance by
Purchaser of this Agreement and the consummation by Purchaser of the
transactions contemplated hereby will not, with or without the giving of
notice or the lapse of time, or both, (i) violate any
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provision of any law, rule or regulation to which Purchaser is subject; (ii)
violate any order, judgment or decree applicable to Purchaser; or (iii)
conflict with or result in a breach of or a default under any term or
condition of Purchaser's Certificate of Incorporation or By-Laws or any
agreement or other instrument to which Purchaser is a party or by which it or
its assets may be bound, except in each case, for violations, conflicts,
breaches or defaults which in the aggregate would not materially hinder or
impair the consummation of the transactions contemplated hereby.
5.3 Inspection Opportunity. Purchaser acknowledges that it and its
authorized agents have been given an opportunity to examine such documents and
other information relating to the Acquired Corporation as they have deemed
necessary or advisable in order to make an informed decision relating to the
purchase of the Stock, that they have been afforded an opportunity to ask
questions and to obtain any additional information necessary in order to
verify the accuracy of the information furnished, and that they have, in fact,
asked all such questions and reviewed such documents and other information
that they have deemed necessary in order to enter into this Agreement.
5.4 Purchase for Investment. Purchaser will be acquiring the Stock
solely for its own account for investment and not with a view to or for the
distribution thereof.
5.5 Consents. No consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authorities is required in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated thereby.
6. Survival. The representations and warranties of the parties made in
Articles 5 and 6 hereof shall survive the Closing for a period of one year from
the Closing
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Date.
7. Further Assurances. At any time and from time to time after the
Closing Date, each of the parties hereto shall, at the request of any of the
others, execute and deliver any further instruments or documents and take all
such further action as may be reasonably requested in order to further
consummate the transactions contemplated by this Agreement. This Article shall
survive the Closing.
8. Brokers. Seller and Purchaser warrant and represent to each other
that they dealt with no broker, finder or similar agent or party who or which
might be entitled to a commission or compensation on account of introducing
the parties, the negotiation or execution of this Agreement and/or the closing
of the transaction provided for herein other than Blue Sky Commercial
("Broker"). Purchaser and Seller hereby respectively agree to indemnify and
hold harmless the other party from and against all loss, liability, damage and
expense (including, without limitation, attorneys' fees) imposed upon or
incurred by the other party by reason of any claim for commissions or other
compensation for bringing about this transaction by any broker, finder or
similar agent or party other than Broker who claims to have dealt with the
indemnifying party in connection with this transaction. Seller agrees to pay
Broker any commissions earned by Broker in connection with this transaction
pursuant to a separate agreement between Seller and Broker. The provisions of
this Article shall survive the Closing or any termination of this Agreement.
9. Indemnification.
9.1 Indemnification by Seller. Subject to the further
provisions of this Article, Seller shall protect, defend, hold harmless and
indemnify Purchaser, its officers, directors, shareholders, employees, agents
and affiliates, and their respective successors
20
and assigns, from, against and in respect of any and all losses, liabilities,
deficiencies, penalties, fines, costs, damages and expenses whatsoever
(including without limitation, reasonable professional fees and costs of
investigation, litigation, settlement, and judgment and interest) ("LOSSES")
that may be suffered or incurred by any of them arising from or by reason of
(i) any Retained Liability; (ii) the breach of any representation, warranty,
covenant or agreement of Seller contained in this Agreement or in any document
or other writing delivered pursuant to this Agreement; and (iv) any and all
actions, suits, proceedings, claims, demands, assessments, judgments, costs
and expenses (including without limitation, interest, penalties, reasonable
legal fees and accounting fees) incident to the foregoing and the enforcement
of the provisions of this Section 10.1.
9.2 Indemnification by Purchaser. Subject to the further
provisions of this Article, Purchaser and the Acquiring Corporation shall
jointly and severally protect, defend, hold harmless and indemnify each
Seller, and their respective partners, employees and agents, and its
successors and assigns from, against and in respect of any and all Losses that
may be suffered or incurred by any of them arising from or by reason of (i)
the breach of any representation, warranty, covenant or agreement of Purchaser
contained in this Agreement or in any document or other writing delivered
pursuant to this Agreement; and (ii) any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses (including without
limitation, interest, penalties, reasonable legal fees and accounting fees)
incident to the foregoing and the enforcement of the provisions of this
Section 10.2.
9.3 Notice and Defense of Claims. Whenever a party hereto
(such party and each of its affiliates which is entitled to indemnification
pursuant to any provision of this
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Agreement, an "INDEMNIFIED PARTY") shall learn after the Closing of a claim
that, if allowed (whether voluntarily or by judicial or quasi-judicial
tribunal or agency), would give rise to an obligation of another party (the
"INDEMNIFYING PARTY") to indemnify the Indemnified Party under any provision
of this Agreement, before paying the same or agreeing thereto, the Indemnified
Party shall promptly notify the Indemnifying Party in writing of all such
facts within the Indemnified Party's knowledge with respect to such claim and
the amount thereof (a "NOTICE OF CLAIM"). If, prior to the expiration of
fifteen (15) days from the mailing of a Notice of Claim, the Indemnifying
Party shall request, in writing, that such claim not be paid, the Indemnified
Party shall not pay the same, provided the Indemnifying Party proceeds
promptly, at its or their own expense (including employment of counsel
reasonably satisfactory to the Indemnified Party), to settle, compromise or
litigate, in good faith, such claim. After notice from the Indemnifying Party
requesting the Indemnified Party not to pay such claim and the Indemnifying
Party's assumption of the defense of such claim at its or their expense, the
Indemnifying Party shall not be liable to the Indemnified Party for any legal
or other expense subsequently incurred by the Indemnified Party in connection
with the defense thereof. However, the Indemnified Party shall have the right
to participate at its expense and with counsel of its choice in such
settlement, compromise or litigation. The Indemnified Party shall not be
required to refrain from paying any claim which has matured by a court
judgment or decree, unless an appeal is duly taken therefrom and execution
thereof has been stayed, nor shall the Indemnified Party be required to
refrain from paying any claim where the delay in paying such claim would
result in the foreclosure of a lien upon any of the property or assets then
held by the Indemnified Party. The failure to provide a timely Notice of Claim
as provided in this Section 10.3 shall
22
not excuse the Indemnifying Party from its or their continuing obligations
hereunder; however, the Indemnified Party's claim shall be reduced by any
damages to the Indemnifying Party resulting from the Indemnified Party's delay
or failure to provide a Notice of Claim as provided in this Section 10.3.
9.4 Assertions Deemed True. For purposes of this Article, any
assertion of fact and/or law by a third party that, if true, would constitute
a breach of a representation or warranty made by a party to this Agreement or
make operational an indemnification obligation hereunder, shall, on the date
that such assertion is made, immediately invoke the Indemnifying Party's
obligation to protect, defend, hold harmless and indemnify the Indemnified
Party pursuant to this Article.
9.5 The obligation of Seller under Section 10.1 shall be
satisfied first from the Escrow Fund and, if the Escrow Fund is inadequate to
provide indemnification to Purchaser, then from Seller directly.
9.6 In addition, to the extent that the Acquired Corporation
continues to have the benefit of any insurance coverage that existed prior to
the Closing which insurance coverage includes coverage for any claim, the
Acquired Corporation will cooperate with Seller in pursuit of recovery under
such insurance coverage so as to minimize the amount of any uninsured losses
to be borne by the parties hereunder. Purchaser, the Acquired Corporation and
Seller agree to use reasonable efforts to collect amounts available under any
such other agreement or insurance.
10. Releases.
10.1 Each Seller fully and unconditionally releases and
discharges all claims and causes of action which he or his heirs, personal
representatives, successors,
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or assigns ever had, now have, or hereafter may have against Purchaser,
Acquired Corporation and, when acting as such, their respective officers,
directors, employees, counsel, agents, and stockholders, in each case past,
present, or as they may exist at any time after the date of this Agreement,
and each person, if any, who controls, controlled, or will control any of them
within the meaning of Section 15 of the Securities Act, except claims and
causes of action arising out of, based upon, or in connection with this
Agreement or any other agreement or instrument executed and delivered in
connection with this Agreement.
10.2 Acquired Corporation fully and unconditionally releases
and discharges all claims and causes of action which it, its agents,
successors or assigns ever had, now have, or hereafter may have against each
Seller except claims and causes of action arising out of, based upon, or in
connection with this Agreement or any other Agreement or instrument executed
and delivered in connection with this Agreement.
11. Costs and Fees. The parties shall pay for their own legal and
other advisers retained in connection with this transaction except that the
Purchaser shall pay the fees of the Acquired Corporation's accountants in
connection with their preparation of the financial statements referred to in
Section 5.3 hereof which amount shall not exceed $6,000.00. The provisions of
this Article shall survive the Closing.
12. Notices. All notices, demands, requests, consents or other
communications ("NOTICES") which either party may desire or be required to
give to the other hereunder shall be in writing and shall be delivered by
hand, overnight express carrier, or sent by registered or certified mail,
return receipt requested, postage prepaid, in either event, addressed to the
parties at their respective addresses first above set forth.
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A copy of any Notice given by Seller to Purchaser shall simultaneously be
given in either manner provided above to Squadron, Ellenoff, Plesent &
▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇
▇▇▇▇▇▇▇▇, Esq. A copy of any Notice given by Purchaser to Seller shall
simultaneously be given in either manner provided above to ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
& Case, L.L.C., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. Notices given in the manner aforesaid shall be deemed to
have been given three (3) business days after the day so mailed, the day after
delivery to any overnight express carrier and on the day so delivered by hand.
Either party shall have the right to change its address(es) for the receipt of
Notices by giving Notice to the other party in either manner aforesaid. Any
Notice required or permitted to be given by either party may be given by that
party's attorney.
13. Miscellaneous.
13.1 Successors and Assigns; Joint and Several Liability. This
Agreement shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns. The agreements, obligations,
representations and warranties of Seller or any of the parties comprising
Seller hereunder shall be deemed to be the joint and several agreements,
obligations, representations and warranties of each party comprising Seller.
13.2 Governing Law. This Agreement shall be governed by,
interpreted under and construed and enforced in accordance with, the laws of
the State of New York.
13.3 Captions. The captions or article headings in this
Agreement are for convenience only and do not constitute part of this
Agreement.
13.4 Construction. This Agreement has been fully negotiated by
the
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parties and rules of construction construing ambiguities against the party
responsible for drafting agreements shall not apply.
13.5 Entire Agreement. This Agreement (including the Exhibits
annexed hereto) contain the entire agreement between the parties with respect
to the subject matter hereof and supersedes all prior understandings, if any,
with respect thereto.
13.6 Amendments. This Agreement may not be modified, changed,
supplemented or terminated, nor may any obligations hereunder be waived,
except by written instrument signed by the party to be charged or by its agent
duly authorized in writing or as otherwise expressly permitted herein.
13.7 No Waiver or Extension. No waiver of any breach of any
agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof or of any other agreement or provision
herein contained. No extension of the time for performance of any obligations
or acts shall be deemed an extension of the time for performance of any other
obligations or acts.
13.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which taken together shall constitute but one
and the same original.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
PRIVITIZATION PLUS, INC.
By: _______________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
FAMILY GOLF CENTERS, INC.
By: ______________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
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